Colt Company owns a machine that can produce two specialized products. Productio

Question

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machine's capacity is 2,100 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3,570 units of Product TLX and 4,930 units of Product MTV. Selling prices and variable costs per unit to produce the products follovw Selling price per unit Variable costs per unit Product TLX 13.00 Product MTV $7.80 4.68 3.90 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round cost per unit answers to 2 decimal places.) Product TLXProduct MTV Contribution margin per unit Contribution margin per production hour Product TLXProduct MTV Total Maximum number of units to be sold 3,570 4,930 Hours required to produce maximum units For Most Profitable Sales Mix Product TLXProduct MTV Total Hours dedicated to the production of each roduct Units produced for most profitable sales mix Contribution margin per unit Total contribution margin

Explanation / Answer

Product TLX Product MTV Contribution margin per unit (Selling price - variable cost) $9.10 $3.12 Units per hour 3 5 Contribution margin per production hour $27.30 $15.60 Product TLX Product MTV Total Maximum no. of units to be sold 3,570 4,930 Units per hour 3 5 Hours required to produce maximum units 1,190 986 2,176 For most profitable sales mix Product TLX Product MTV Total Hours dedicated to the production of each product 1,190 910 2,100 Units per hour 3 5 Units produce for most profitable mix 3,570 4,550 Contribution margin per unit $9.10 $3.12 Total contribution margin $32,487 $14,196 $46,683

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